The Inland Valley Development Agency has reached a settlement with the State of California Department of Finance that will free up money long in dispute between the state and two local agencies for use in further development at San Bernardino International Airport.
The Inland Valley Development Agency and the San Bernardino International Airport Authority were formed in the early 1990s as joint power authorities by the County of San Bernardino and the cities of Redlands, Highland, San Bernardino, Loma Linda, Grand Terrace and Colton in anticipation of the closure of Norton Air Force Base. The Inland Valley Development Agency was intended to oversee the redevelopment of property around the base property for the economic benefit of the region, and the San Bernardino International Airport Authority was chartered to convert the base to civilian use. Eventually the cities of Redlands, Highland and Grand Terrace ceased their involvement in the Inland Valley Development Agency and the cities of Redlands and Grand Terrace ended their participation in the San Bernardino International Airport Authority.
In 2011, Governor Jerry Brown induced the state legislature to pass two laws, ABX126 and ABX127, which eliminated the more than 400 redevelopment agencies throughout the state and directed that the money normally passed through to them by Sacramento instead to be utilized for education and law enforcement funding. The law dissolved redevelopment agencies and enjoined them from entering into contracts with enforceable obligations after June 28, 2011. The legislation gave the California Department of Finance authority over the cessation of the redevelopment agencies and the money they had formerly controlled, and mandated that any disputes between defunct city or county redevelopment agencies and the Department of Finance be hashed out in Sacramento Superior Court. Part of the legislation shelving the redevelopment agencies called for cities to create for themselves or have the county create for them a successor agency to oversee and wind down that particular agency’s functions and dispose of its enforceable obligations by scheduling and executing the payments needed to discharge those obligations.
The boards for the San Bernardino International Airport Authority and the Inland Valley Economic Development Authority asserted that since they are joint powers authorities dedicated to the reuse of what was formerly federal military property, they were not municipal redevelopment agencies and, accordingly, not subject to ABX126 and ABX127. They contended the property tax money from the area around the former air base should remain available to the Inland Valley Development Authority and be used to assist in defraying the $949.5 million in debt and obligations both agencies had accumulated in the airport conversion effort. The agencies issued hundreds of millions of dollars in bonds to fund improvements to the facility and the area surrounding it. Those bonds were sold to investors under the assumption that the infrastructure to be purchased with the bond proceeds would lead to the creation of an aerodrome with operational revenue, and together with property tax revenue increases enough money would be generated to make timely payments to the bondholders.
Those agencies held in their dispute with the California Department of Finance that they are legally eligible to remain in place and that they intended to bring in roughly $432 million in property taxes over the span between 2012 and 2022, and had committed $22 million of that toward road improvements and the rest for improvements and operations at the airport.
The Department of Finance asserted that since the authorities had no specific contracts related to the $432 million, they had no legitimate claim to the projected property tax revenue, as the money was secured only by an agency board resolution.
After eight years of back-and-forth, the settlement reached earlier this month resolves outstanding payments in support of the San Bernardino International Airport Authority under the Inland Valley Development Agency’s commitments to support the conversion of the military base to a civilian airport.
The executed agreement resolves all disputed contentions between the Department of Finance and the Inland Valley Development Agency, while arranging for a final payment of over $5.5 million to the San Bernardino International Airport Authority from the Inland Valley Development Agency in January 2021.